India’s three state-owned oil firms which supply 90 per cent of the country’s fuel suffered a record Rs 18,000 crore loss in the first quarter of 2022. This was a consequence of the government not raising prices till UP election results in March, despite crude rates increasing globally. But by defying western pressure to import Russian oil at discounted rates since February this year, India has already saved Rs 35,000 crore.
Fuel not getting cheaper despite gains
After Russia’s invasion of Ukraine, traditional buyers of its crude oil pulled out and hence traders started offering steep discounts. Able to maneuver its way around diplomatic issues, India was able to emerge as the second largest importer of Russian oil after China, while maintaining stable ties with US and Europe. But despite the huge savings reported by Times of India, petrol and diesel isn’t getting any cheaper in India even as global crude prices have plunged to a seven-month low.
Last week a report also claimed that Russia may offer more discounts to India in a bid to prevent it from joining US and its European allies in imposing a price cap on Russian oil. The loss-hit oil companies which reportedly asked for a Rs 28,000 crore compensation, will also be able to get only Rs 20,000 crore from the government.
Yet to pare losses?
Indian fuel suppliers may not be revising prices despite a consistent drop in crude rates, because even after breaking-even for petrol, they are still losing money on diesel.
Despite relying on imports for 85 per cent of its fuel requirements, India has managed to freeze fuel prices thanks to discounted Russian oil, as Europe and the US suffer an energy crisis. Iraq has remained India’s top oil supplier by offering the highest discounts, while Saudi surged past Russia to become India’s second-largest source of fuel.